Big energy firm imposes two-year price freeze

Just a day before the industry regulator is expected to announce a wide-ranging new inquiry into competition in the energy sector, one of the UK's biggest suppliers has said it is freezing its prices until January 2016.

However, industry-watchers described the move as "bitter-sweet", as Scottish and Southern Energy (SSE) said it would be compensating for the revenue lost by holding down its prices by scaling back investment in renewable energy, and cutting about 500 jobs, which will help it make anticipated savings of £100million a year.

At the same time, SSE is also to split its retail and wholesale operations to improve transparency.

Writing in the Financial Times, Guy Chazan noted that SSE's move "comes when the 'big six' gas and electricity suppliers are coming under mounting pressure to shield their customers from rising energy costs".

He also said that regulator Ofgem's report, due tomorrow, is expected to instigate a full-scale investigation into the energy market.

This comes after suppliers imposed price increases of well above inflation last year that incurred the wrath of politicians and consumers.

Richard Lloyd, Which? executive director, said SSE had taken a “bold move” in an energy market “badly in need of change”.